Inflation in India falls to new nine-month low of 6.61 pc

New Delhi, Dec 26 (PTI) Providing the much-needed relief to the Indian government that is battling economic slowdown, inflation nearly halved to 6.61 percent from a peak of 12.91 percent four months ago, but the Finance Ministry said prices of primary articles are still too high for comfort.

A 0.23 percentage point fall in inflation for the week
ended December 13 gives more room to the Reserve Bank of India
to signal a further cut in interest rates, as was advocated by
the Mid-Year Review of the economy in case manufacturing
continued to be hit by global developments.

Even as inflation fell for the seventh straight week,
food inflation rose to 10.46 percent from 10.19 percent
during the week. In fact, primary category, comprising
non-processed food and raw items, continued to be expensive.

The Finance Ministry in a statement said, "Prices of
primary articles continue to rule high, despite the decline in
overall inflation."

Analysts expect that falling commodity prices and
slackening demand globally may further bring down inflation in
the range of 2-3 percent by March 2009.

"I expect Inflation to drop sharply to below 2 per cent
by March... decline in manufactured goods prices and commodity
prices," HDFC Bank Chief Economist Abheek Barua said.

During the week, manufactured products became cheaper
with basic heavy inorganic chemicals turning less expensive by
7.2 percent. Also groundnut oil, sugar, cement and certain
textile items like cotton yarn were cheaper.

Among food items, vegetable prices fell by more than
three percent followed by tea, cereals, spices while sea
fish, wheat and bajra got dearer.

Food items which became expensive were pulses, other
cereals, brinjal and cabbage. PTI DP
SAK